REAL ESTATE – Danish pension fund KP International A-S has made its inaugural investment in German real estate, paying a bit more than €30m for an office building in Düsseldorf.
The 16-story building is fully rented to Sparda Bank West. Sparda, a German co-operative bank, uses it as its headquarters.
In acquiring the building from a Dutch owner, KP was advised by law firm Lovells and Cushman & Wakefield Investors, which handled the due diligence and asset management.
KP is a pension fund for local government employees in Denmark. The assets of Sampension, KP’s fund management unit, total €12bn, though this figure includes money from schemes for Danish teachers and graphic designers.
On behalf of KP and the other schemes, Sampension invests 7% of total assets to foreign real estate and other asset classes. Another 19% of the €12bn is allocated to foreign equities and 34% to foreign bonds.
KP’s latest business report reflects that the total return on investments was 12.9% in 2005, up from around 7% in 2004. Within that, the scheme’s property investments generated a return of 13.8% in 2005 compared with an average of 9.1% between 2001 and 2004.
"Investments will continue to be dominated by investments in Danish and foreign listed bonds, property and shares in listed foreign companies to spread the risk and secure high transferability," KP said in the report.
Last January, Sampension also said it would increase its private equity exposure to 3% from 2% in the mid-term.
Separately, Deka Immobilien Investment, a German provider of open-ended property funds, said one of its Europe-focused funds had sold three US commercial properties for €550m.
"We took advantage of the excellent market situation in the US to optimise one its funds. Big earnings were made for the fund’s shareholders," Deka Immobilien said without elaborating.
Deka Immobilien said that following the withdrawal from the US, the fund would now focus more on Europe’s key property markets. "However, we will not buy at any price. For us it’s crucial that if we reduce the fund’s liquidity today, we don’t have write-downs (on property values) tomorrow, said Franz Lucien Mörsdorf, chief executive of the firm.
Deka Immobilien is Germany’s leading provider of open-ended real estate funds, which are primarily targeted to private investors. Deka and its subsidiaries have €17.8bn invested in these products.